Just when one thought the SEC has hit rock bottom in stupidity, corruption and porn-addiction terms, to paraphrase the beloved Dennis Gartman, it whips out a shovel and starts digging.

Today's case in point: a report by the agency that Mary Schapiro made into Wall Street's punching bag (and whose legacy her Morgan Stanley-friendly replacement is set to perpetuate) according to which "unexplained rapid price drops in single stocks have generally been triggered by human error, not nefarious trading activity or high-speed trading algorithms gone wild, an official at the U.S. Securities and Exchange Commission said on Tuesday."

"What we are seeing is the result of sloppiness, combined with a lack of checks and balances," Greg Berman [formerly of RiskMetrics] said at a Securities Industry and Financial Markets Association conference. "In this day and age, there should be no excuse for these types of mistakes, especially considering the significant negative impact that these events have on investor confidence."

Most rapid price spikes are caused by old fashioned human mistakes, such as "fat finger" errors, where a trader may accidentally add an extra zero to an order, or by portfolio managers accidentally requesting a large order be immediately executed rather than meted out in a managed flow, Berman said.

"Contrary to public speculation, these types of events do not seem to triggered by proprietary high-speed algorithms, by robots gone wild, or by excessive order cancellations."

Oh, so like Waddell and Reed was to blame for the flash crash, not the fact that some 70% of the tape is filled with empty quotes in which one algo tries to outsmart another algo, and instead of trading blast hollow bids and asks just to game the NBBO?

But just how did the SEC come up with this startling conclusion which flies in the fact of all the factual evidence we have presented over the past 3 years?

Berman heads up a new initiative at the SEC that analyzes market data using a platform launched in January called Market Information Data Analytics System, or MIDAS, which was developed by Red Bank, New Jersey-based automated trading firm Tradeworx.

MIDAS gives the SEC access to all orders posted on the national exchanges, including modifications, cancellations and trade executions of those orders, as well as all off-exchange executions, putting the regulator on even footing with the most sophisticated high-speed trading firms.

Traditionally when a problem in the market has needed to be investigated, the SEC has gone to the exchanges, the Financial Industry Regulatory Authority, and the firm that introduced the error, to diagnose the cause. But MIDAS allows the regulator to do its own assessment as well.

And once again, the conclusion:

The SEC has found that high-frequency trading tactics have not caused or amplified the mini flash crashes it has examined, Berman said.

This is Tradeworx:

So, to summarize, the SEC which admits it was clueless in analyzing the modern, fragmented market (yet which found definitively that the culprit for the May 2010 flash crash was Waddell and Reed, and nobody else, using what technology at the time, nobody knows), uses a platform developed by High Frequency Trading firm Tradeworx... to reach a conclusion that High Frequency Trading firms are innocent of every flash crash resulting from an HFT algo gone haywire...

"The SEC has found that high-frequency trading tactics have not caused or amplified the mini flash crashes it has examined, Berman said."

Perhaps we should give this Burman fellow the benefit of the doubt... he seems awfully smart and has an impecable CV just like Rubin and Summers... and it's not very bloody likely that this report was done on the cheap either... it wouldn't surprise me in the least if it cost tens of millions...

... and for or their next act, the SEC will use an 'adult entertainment industry' designed tool to determine that watching online porn in the office does not negatively impact employee job performance....

An ancillary finding of the study, while not its main objective but nonetheless felt to be important by those participating was the finding that midget tranny porn was not considered to be the least bit perverted, degenerate, twisted, demeaning, abnormal or aberrant. Several however, did refer to it as "kinda fucked up"

i've been saving this forever, but always held back from sharing thinking that someone at the sec was actually trying to get some work done. sorry. it's too late. but maybe it will crash their servers.

and they also found out that drones don't kill people....
violating every democratic law by killing privacy is good because they where able to locate a lost puppy thanks to all that wire tapping...
and people don't matter if they have less than a billion on their checking account...

I nominate:squank (n) - an utterance, or the one who originates the utterings or mutterings, that are both squawking and from a wanker or ought to be associated with a total wanker.This handy noun can also be compounded with other nouns posing as adjectives, e.g., fraudsquank. "Dick Cheney accused SNOWDEN of being a traitor! Now that's a fraudsquank if I ever heard one"

derived adjective and antonym to swanky: squanky. "My this place is extra squanky" (filled with squanking cockmunchers)

compound noun: freudensquank (n): the condition of having tried to play off others as squanks only to show yourself, in fact, to be the squank

Absurd. Selling of stocks happens because other traders have been selling. Buying because others are buying. It's called trend. These HFT's are programed by traders with the same considerations. If the price moves a certain way it triggers stop losses or sell orders. If the SEC really believes what they wrote then they should get rid of the circuit breakers on the markets....

These machines are designed to trade up and down to create volatility & churn, to get fee rebates on the # of trades per SECOND which no human can do, and to trigger orders to CANCEL that are not from HFT's which is ILLEGAL.

no, we should have volatile markets switching from tight ranges to sharp spikes. Like variable-rate dosing to test addictiveness or effectiveness of drugs on animals, you test the market's ability (humans) to tolerate the machine parasitic actions by making an approximate (but not precise) frequency of alternations from "flat" to "volatile" and within each regime of "dosing" you extract the maximum number of dollars which is the higher rebate for the higher churn paid by the exchanges to the HFT's for being "market-makers" (win or lose). In addition if they win trades that's extra money but if you lose x on a trade and gain x+0.0001 for the "market-maker bonus" you now have only ONE variable to be concerned with: how many times you can do that (small win) per millisecond (big win).

The dosing regime change is indicated from the concentrated quote-stuffing & conditional-order execution leading to cancellation of triggered trades of non-HFT's. The HFT's can be cancelled out in this way too BUT since they never miss a beat they merely re-introduce new trades the next millisecond and are unaffected.

USA Today poll says that 98% of US population thinks that the US should invade Syria and remove Assad.

USA Today poll says that 79% of US population thinks that Ben Bernanke is doing a Great Job and saved the economy

USA Today poll says 68% of US population says Edward Snowden is a "traitor" and NSA surveillance is OK

USA Today poll just released says that 87% of US population believes the SEC's contention that flash crashes and other "trading anomalies" are just human error, not anything untoward or evil in any way.

Whoa, whoa, whoa....whoa. You're telling me that federal government agencies may actually have been formed to protect the very industries they are meant to police? That the public good rationale is a ruse, a facade? That the good intentions of many employees within these agencies are being used and manipulated into plausible deniability in order to dispel criticism as mere conspiracy theory? That those that would go to work each day enforcing rules are used as a smoke screen to cover the fact that the industries and the paid-for legislators vis-a-vis lobbying firms actually author legislation behind the rules rendering those civil servants impotent? Wacko.